Press Release

VIS Maintains Entity Ratings of Cyan Limited

Karachi, January 1, 2021: VIS Credit Rating Company Limited (VIS) has maintained the entity ratings of Cyan Limited (CL) at ‘A/A-1’ (Single A/A-One). Outlook on the assigned rating has been revised from ‘Stable’ to ‘Negative’. Previous rating action was announced on December 31, 2019.

Assigned ratings continue to derive strength from strong sponsor profile (subsidiary of Dawood Corporation) and adequate corporate governance infrastructure along with the presence of qualified and seasoned professionals in the management team. However, the overtime capital erosion due to bumper dividend payouts, holding of strategic investment (Dawood Lawrencepur Limited and Dawood Hercules Corporation Limited) and increase in utilization of short-term funding (undertaken with a view to maximize shareholder’s return). This in turn resulted in increased leverage indicators which is a rating constraint. Nonetheless, adequate risk management framework is in place.

CL is principally engaged in investment in public equities market, with an objective to pursue active returns. During the year 2020, given the background of Covid-19 and improving market sentiment (owing to positive macro-economic sentiments), CL’s investment strategy was realigned to maintain high growth investments and the exposures were built accordingly with major focus towards high growth potential sectors. Major investments are made in technology, vanaspati and allied, steel, cement and banking sectors. On fixed income front, liquidity derived from maturing T-Bills during 2020 was channeled in long term PIBs while exposure in TDRs was also enhanced.

Given limited revenue diversification, earning profile of the company is largely dependent on dividend income and capital gains. Post 2016, the dividend income has declined on a timeline basis and the same trend continued in the ongoing year. This decline was partially offset by capital gains on investments as CL shifted its focus on growth companies in public market. Significant increase in financial charges led to a negative bottom-line in 9M’20, however CL expects positive outcome going forward due to single digit interest rate.

Moreover, the company also undertakes consultancy services for public and private issues/mandates. Given the limited IPOs in public markets, advisory income has emanated solely from services rendered to related parties. Going forward, as per management, advisory income is expected to increase. This diversification in revenue base would bode well for the company in terms of risk perspective.

For further information on this rating announcement, please contact Mr. Muhammad Tabish (Ext: 204) or the undersigned (Ext. 301) at 021-35311861-70 or email at

Faheem Ahmad
President & CEO

Applicable Rating Criteria: Non-Bank Financial Companies (October 2017)

Information herein was obtained from sources believed to be accurate and reliable; however, VIS Credit Rating Company Limited (VIS) does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information.VIS , the analysts involved in the rating process and members of its rating committee do not have any conflict of interest relating to the rating(s)/ranking(s) mentioned in this report.VIS is paid a fee for most rating assignments. This rating/ranking is an opinion and is not a recommendation to buy or sell any securities. Copyright 2021 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .

VIS Credit Rating Company Limited